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Experiment Time: The New Massachusetts Health Care Situation

Experiment Time: The New Massachusetts Health Care Situation

 
The fervent debate has lost most of its steam as the United States Supreme Court has rejected the premiere legal challenge and November’s presidential election snuffer out the opposition’s hopes for a late reversal. Come the New Year, every American in the country, will be required to carry health insurance or a pay a fine, as one of the last pieces of Obamacare falls into place. 
 
That said, for the 6 million residents of Massachusetts, the implementation of Obamacare will not mean a whole lot. In 2006 then-governor Mitt Romney signed a health-reform initiative that instituted a similar insurance mandate with strict rules for when employers must provide plans and the blueprint for a government online insurance exchange or marketplace. This plan, which was affectionately known as Romneycare, ultimately served the model for the national plan. 
 
Roughly six years into the Massachusetts healthcare experiment, residents have had substantial time and experiences to answer the kinds of inquiries you may be asking about the national plan: Will my premiums increase? Will my employer drop my insurance? Will my taxes increase? Will I face longer waits to schedule or see my doctor?
 
As a small state with a robust economy, the most doctors per resident in the nation, and above-average health care spending, Massachusetts is not a perfect indicator for the country. Moreover, the laws are far from uniform, and the state only recently began addressing the costs of care. However, the experiences of Massachusetts residents can still offer plenty of advice regarding what to expect on January 1st and what you should do to prepare for the new law change. 
 
Even before the law took effect in 2007, only 8 percent of Massachusetts residents were without insurance. The requirements, along with subsidies that make policies affordable, decreased the state’s uninsured population down to 3 percent, the lowest in the nation. The nation as a whole is expected to fall short of this milestone: by 2017, roughly an estimated 10 percent of Americans will still go without health insurance, down from 16 percent today. With less generous under Obamacare and some states reusing to expand Medicaid offerings, more impoverished Americans may go without insurance. 
 
Also, workers at large firms that offer generous health care packages will see no changes to their plans. In Massachusetts, companies that employ fewer than 11 full-time workers can refuse to provide health insurance, while larger firms can opt out of the requirements by paying a fine of $295 per employee. From 2005 to 2011, the percentage of businesses with three or more workers that provide insurance increased from 70 to 76 percent, according to a Massachusetts employer survey. 
 
 
Source: whitehouse.gov

SEC Proposes Money Market Fund Reforms

SEC Proposes Money Market Fund Reforms

The United States Securities and Exchange Commission unanimously agreed to propose new regulations that would alter the way that money market funds operate in order to make them less volatile and susceptible to fluctuations that would ultimately harm investors. 

The rules proposed by the federal agency include two principal reforms that may be adopted singularly or in combination. One alteration would require a floating net asset value for the prime institutional money market fund class, while the other alteration would permit the use of redemption gates and liquidity fees in times of distress. The proposal also includes additional disclosure and diversification measures that would be applied under either of the proposed regulations. 

The United States Securities and Exchange Commission started to evaluate the need for such reforms after the Reserve Primary Fund faltered at the height of the great recession in September of 2008.

“Our main priority is to implement sound and effective reform measures that decrease the susceptibility of money market funds to lengthy runs and to prevent events similar to the one that occurred in 2008,” claimed Mary Jo White, the chairwoman of the Securities and Exchange Commission. 

The public will be allowed to comment on these proposals for 90 days after the regulations are promulgated in the Federal Register. 

Source: sec.gov

SEC Charges Institutional Shareholder Services with Breaching Clients’ Voting Rights

SEC Charges Institutional Shareholder Services with Breaching Clients’ Voting Rights

 
The Securities and Exchange Commission charged a Rockville, Maryland-based proxy adviser Shareholder Service for failing to protect the confidential proxy voting information of clients participating in several proxy contests. 
 
An SEC investigation found that an employee of the serve provided a proxy solicitor with nonpublic information revealing how more than 100 advisory clients were voting their ballots. In exchange for this voting information, the solicitor provided the Institutional Shareholder Services employee with tickets to sporting events and concerts, meals, and airplane tickets. The breach was conducted in part because ISS did not implement sufficient controls over employee access to confidential voting information, as the employee charged gathered said data by logging into the ISS voting website from work or home and using his personal e-mail to relay the details to the proxy solicitor. 
ISS, which is registered with the Securities and Exchange Commission as an investment advisory firm, agreed to settle the charges by a $300,000 fine and retaining an independent compliance consultant. 
 
“Proxy advisers are required to tailor their controls based on the risks of their business in order to protect the integrity of the proxy voting process,” said the Deputy Chief of the SEC Enforcement Division’s Asset Management Unit, Mrs. Jule Riewe. “The Internal controls at Institutional Shareholder Services did not adequately address the prospective misuse of confidential voting information rendered by firm employees.”
According to the agency’s orders, the breach took place from 2007 to 2012; during this time, ISS failed to enforce or establish policies and procedures to impede the misuse of material and nonpublic information rendered by ISS employees. Specifically, the business lacked adequate controls over employee access to confidential client voting information.
 
The order found that ISS violated Section 204A of the Investment Advisers Act of 1940; the SEC order censures ISS and requires the business to pay a $300,000 penalty and take in an independent compliance officer to review the firm’s supervisory and compliance procedures and policies. The officer will evaluate whether the company’s procedures are designed to ensure that its voting services business adheres with the Advisers Act regarding its treatment of client information, interactions with proxy solicitors, and the transfer of gifts.   
 
 
Source: SEC.gov

What Recession? Dow Closes at Record High

What Recession? Dow Closes at Record High

 
U.S. stocks surged today as investors digested solid economic data that appeared to put the financial and housing crises in the nation’s rearview mirror. 
 
The Dow Jones Industrial Average closed the day at a record high of 15,409, after gaining more than 100 points, or 0.7 percent. The S&P 500 also rose 0.7 percent respectively, and the NASDAQ added a solid 0.9 percent. 
 
Moreover, the yield on the 10-year Treasury note surged above 2.1 percent, which marks the highest level in more than a year. Other signs pointing to a robust recovery are reports that housing prices rose better-than-expected at a clip of 10.2 percent during the first quarter. This marks the most significant increase since 2007 and helped bolster the entire housing sector. 
 
In a separate issue, the May reading on consumer confidence hit a five-year high today and jumped far more than expected. 
 
Central banks, including the U.S. Federal Reserve, have been driving the 2013 rally by buying up government bonds to control and push down interest rates and to entice investors to purchase more stock. Central banks in Europe and Japan signaled they were prepared to keep pouring money into their respective markets to keep rates low, even as signs continue to point to a strong recovery. 
 
Some notable price movements for U.S. stocks include Netflix, which slumped after the hyped new season of Arrested Development aired over the Memorial Day Weekend. Moreover, shares of the electric car maker Telsa, which is backed by billionaire Elon Musk, surged 13 percent, as it topped $100 for the first time in the company’s history. 
 
 
Source: whitehouse.gov

Livestrong No More: Nike to Stop Making Livestrong Products

Livestrong No More: Nike to Stop Making Livestrong Products

 
Nike announced that it will cease making and selling products for the Livestrong Foundation at the end of this year.
 
The move to halt production of the Livestrong brand comes as no surprise, especially considering the clothing giant terminated its contract in the fall of 2012 with controversial cyclist Lance Armstrong, who was the founder and face of the Livestrong brand. 
 
Nike has been distancing itself from the notorious cyclist since the United States Anti-Doping Agency released a slew of information and reports in October outlining the extensive steroid use and doping allegations made against Armstrong when he won the Tour De France cycling events seven years in a row from 1999 to 2005. 
 
The U.S. Anti-Doping Agency banned Armstrong from competing in cycling events for life and stripped the former champion of the titles he won during his 14-year career. 
Armstrong, a cancer survivor, founded the Livestrong brand in 1997, but stepped down as chairman of the charity shortly after the October reports were released. Armstrong claimed he was removing his name from the foundation to spare “the foundation from any negative effects as a result of the stigma and controversy surrounding my career.”
Nike has been a staunch supporter of the Livestrong Foundation, which provides free resources and support services, as well as an assortment of programs to help people with cancer. Over the last decade or so, with public support from Armstrong, Nike raised over $100 million for the charity and has sold roughly 88 million of the signature Livestrong yellow wristbands. 
 
Nike announced in a statement that this year’s holiday line will be its last offered under the Livestrong name; however, the company also claimed it will continue to support the foundation by providing funds to it in a direct manner. Besides Nike, other companies, such as Radio Shack and Anheuser-Busch, also terminated their relationship with Lance Armstrong. 
 
The Livestrong Foundation announced in a statement that it is grateful to Nike for their time, creative drive, and resources it brought to the longstanding partnership.  
 
 
Source: sec.gov

SEC Charges NASDAQ for Botching the Facebook IPO

SEC Charges NASDAQ for Botching the Facebook IPO

 
The S.E.C. charged NASDAQ with a securities laws violation resulting from its poor decision-making during the initial public offering and secondary trading of Facebook shares. In response to the charges, NASDAQ has agreed to settle and pay a $10 million penalty, which represents the largest fine filed against the market exchange. 
In the United States, exchanges have an obligation to guarantee that their processes, systems, and contingency plans are effective and adequate to manage an IPO without disrupting the market. According to the agency’s order, despite widespread anticipation that the IPO would be among the most prolific in history with regards to the number of investors participating, a design limitation in the exchange’s platform to match IPO sell and buy orders brought significant disruption to the IPO. Following the disruption, NASDAQ then undertook a series of poor decisions that ultimately led to the rules violations. 
 
According to the agency’s order, several members of the exchange’s senior leadership team undertook a “code blue” conference call and decided not to delay the start of secondary trading in Facebook with the exception that they had righted the system error by removing lines of computer code. However, the team did not understand the root of the problem, and the market’s decision to initiate trading before understanding the problem caused a series of violations, including the exchange’s fundamental rule governing the time/price priority for executing trade orders. This problem caused in excess of 30,000 Facebook orders to remain stuck in the exchange’s system for more than two hours when said shares should have been promptly cancelled or executed. 
“The action against NASDAQ describes how poorly designed systems not only disrupted one of the most significant IPOS in history, but produced pervasive and substantial violations of our market’s fundamental rules,” said George Canellos, the Co-Director of the SEC’s Enforcement Division. 
 
Additionally, NASDAQ further violated its rules when it took a short position in Facebook in an unauthorized account. The exchange’s rules do not allow it to use an error account for any reason; NASDAQ subsequently covered the short position for a profit of roughly $10.8 million, which is also in violation of its rules. The exchange further violated its rules in a few other ways during the opening of trading following the end of the display-only period for the company and following a substantial freeze in Zynga trading. 
 
 
Source: SEC.GOV

Rising Rapidly: Mortgage Rates are Highest in a Year

Rising Rapidly: Mortgage Rates are Highest in a Year

 
Mortgage rates in the U.S. have hit their highest level in more than a year, making homes more expensive for purchases who seek to finance their new abodes. 
The rates on 30-year-fixed mortgages jumped nearly .25 percent to 3.81 percent this week, according to mortgage lending giant Freddie Mac. This is an increase of 15 percent from the record low of 3.31 percent set during November of 2012 and the highest rate since May of 2012. The 30-year rate dropped as low as 3.35 percent in early May. 
 
The rates for 15-year fixed mortgages also spiked t0 2.98 percent, representing an increase of .21 percent. 
 
Prospective home buyers unhappy with these increased rates can blame it on Ben Bernanke, the chairman of the U.S. Federal Reserve. According to Keith Gumbinger, an executive with a premiere mortgage information company, “Bernanke’s comments left the impression that the central bank’s stimulus policy might start to be pulled back, perhaps as early as this September,” said Gumbinger. “This announcement influenced the spike in interest rates as investors worked quickly to adjust their positions.”
The stimulus policy, in which the Federal Reserve purchases up as much as $85 billion a month in U.S. treasuries and mortgage backed securities, has kept interest rates close to zero by providing a willing buyer for loans. If the central bank pulls the reins on their purchases, buyers will likely demand higher yields to pick up the slack, which will push interest rates up.
 
Bond yields, which are utilized to track mortgage rates, have risen even faster than mortgage rates. The 10-year Treasury is currently at 2.12 percent or .45 percentage points above its April level. 
 
As rates continue to rise, the number of loan refinancings will invariably decline. Refinancing applications dropped by 12 percent week over week, representing the largest single-week drop in 2013. That said, mortgage rates will probably have to climb much righter to have a significant impact on buyers. 
 
Mortgage rate increases over the past month have only added roughly $20 to monthly mortgage payments for every $100,000 borrowed. However, the increase in rates ultimately limits how much buyers will bid on homes, which in turn, dampens home values. 
 
 
Source: whitehouse.gov

On the Brink: Federal Disability Trust Fund Disappearing Quickly

On the Brink: Federal Disability Trust Fund Disappearing Quickly

Roughly 11 million Americans depend on federal disability payments; however, the system is on the verge of running out of money.
According to a government report, the Social Security Disability Insurance program is expected to run out of money in its trust fund sometime in 2016, years before both the Social Security and Medicaid programs. If this happens, the revenues coming into the program would only be enough to cover roughly 80 percent of the payments owed to the disabled and their families.
The trustees of Medicare and Social Security will release an update on the status of the disability program later this week. The annual report will also offer new estimates for the exhaustion of Medicare’s hospital fund, and of Social Security’s retirement fund, which is currently set to run out of funds in 2035.
Although the disability program is the smallest of the three, it will be the first program that Congress has to address. That said, there is not much agreement regarding the entitlement reform in Washington these days. Attempts to cut Medicare spending have been nothing short of futile.
The Social Security actuaries have developed two ways to bring stability to the disability program. The easiest solution and one legislators have agreed to in recent years, is to divert a larger percentage of the Social Security payroll tax to the disability program and away from the general retirement initiative.
Currently, the combined rate paid by U.S. employers and workers is 12.4 percent. The disability program’s rate is 1.8 percent, and the retirement system’s rate is an overwhelming 10.6 percent. Congress has the ability to authorize a larger share moving toward disability to 2.6 percent for two years and slowly wane this figure to 1.8 percent by 2030. This increase would allow the disability fund to remain solvent until roughly 2033; however, it would cut the retirement system’s lifespan by two years.
The other means, which is highly controversial, would be to increase the disability portion paid by employers and workers by 0.2 percent each. This increase would keep the program running for 75 years; however, there is little desire among legislators to undertake a tax increase.
There are a variety of reasons why the number of Americans collecting disability payments has skyrocketed to roughly 11 million from 8.7 million in 2007. The aging of the baby boomers is one of the primary drivers, along with more women entering the workforce. That said, many argue that Americans are taking advantage of the system, claiming it is too easy to procure benefits under the program.
Regardless of how we got here if Congress does not take action, the disabled population will have to make due with smaller payments.
Source: Congresional Budget Office

See You Later: Lululemon Executive Axed After See-Thru Yoga Pant Fiasco

See You Later: Lululemon Executive Axed After See-Thru Yoga Pant Fiasco

 

 
 Lululemon, the maker of yoga clothing, announced that its chief product executive was let go after last month’s see-through yoga pants debacle.
 
The Vancouver-based clothing company announced on Wednesday that Sheree Waterson, Lululemon’s chief product officer will step down on the 15th of this month after five successful years with the company. 
 
Waterson’s removal comes quickly on the heels of the company’s considerable recall of Lululemon’s popular black yoga pants in March of this year. Waterson’s removal is directly related to the botched production of the pants; as a result of the blunder, the company was required to recall the entire line of black, stretchy yoga pants that had an unacceptable level of sheerness. The pants hit the market with a sales price between $72 and $98.
 
The popular yoga pants were recalled because they were unintentionally see-through. The defective pants represented nearly 18 percent of all women’s yoga pants sold in the company’s store and prompted a severe shortage of the product.
 
Last month, Lululemon announced that the recall would significantly disrupt the company’s operations and ultimately damage its financial results. As a result of the defective production of the popular pants, the company expects first-quarter same-store sales to rise 5 to 8 percent in the first quarter, which is a significant drop from its earlier forecasts of an 11 percent gain. In total, the production mistake is expected to cost the company around $65 to $75 million. 
 
The company offered full refunds to individuals who purchased the pants. As a result of the botched production effort, shares of Lululemon plummeted, and the brand has not announced when the pants will be placed on shelves again. 
 
Source: CNN
 

Wave of the Future: Bitcoin ATMs Coming to a City near You

Wave of the Future: Bitcoin ATMs Coming to a City near You

 

 
Media mogul Jeff Berwick is hoping to bring Bitcoin ATMs to major metropolitan areas throughout the world within the next couple of weeks to months. 
 
Berwick expects to put the first two Bitcoin ATMs in Cyprus and Los Angeles in the next couple of weeks and is choosing between handfuls of different retail locations in both cities. Berwick added that orders for Bitcoin ATMs are coming in by the hundreds from a variety of countries all over the world. 
 
Bitcoin is a virtual currency that was created four years ago. Since its inception, the currency has generated a considerable amount of attention over the past few weeks. The value of the digital currency has surged in the wake of the fumbled bailout and bank-run in Cyprus and worries regarding the health of government-backed paper currencies like the dollar and euro.
 
A Bitcoin ATM will work like a traditional automated teller machine; however, instead of connecting to your bank account, the software Berwick and his team developed will convert cash to Bitcoins stored in your Bitcoin wallet or provide cash based on what is stored in your personal Bitcoin account. 
 
Berwick plans to charge approximately $10,000 to ATM operators to maintain the machines; fees then will be split with said operators. Berwick expects fees to hover around 3 percent, which is slightly higher than what most Americans pay to get cash from ATM’s outside of their banking network. 
 
Thus far, Berwick has used his personal savings to develop the machines and build out the first prototype. Berwick is currently hoping to raise between $2 and $4 million in outside investments to get more ATMs in the hands of operators. 
 
Berwick claims that getting a Bitcoin machine up and running should not be much more difficult than setting up a traditional ATM. In most cases, ATM operators are required to purchase the machine, pour cash into it and maintain network connections to accounts and Bitcoin wallets.  
 
The virtual currency market is rapidly expanding and ever evolving. At this time, Bitcoin users or investors can trade in their coins for cash through a number of websites such as BitInstant and Coinbase that work directly with banks to facilitate transactions. Moreover, some vendors are now accepting the coins as real currency, including the online community Reddit and the blog hosting site WordPress.
 
That said, the financial turmoil in Cyprus was the principal catalyst for the recent Bitcoin surge; and with seemingly no end in sight to Europe’s debt crisis, further financial problems in the Eurozone are expected. “If Cyprus happens in Spain, Italy or Ireland, more people will look to Bitcoin,” claims Berwick.  
 
 
Source: AP